Silver has endured through centuries as a sought-after asset, first as the de facto trading currency before evolving over time to become an investment product.
In addition, the metal is now widely used in a variety of cutting-edge technologies.
So as an individual looking to gain exposure to the silver price or looking to buy physical silver coins or bars, what can be the best ways to gain access to the market?
Different ways to invest in silver
There are a few different options for investors looking to invest in silver. The most straightforward of these is to hold the physical metal. This can be held in bar or coin form, with this highly liquid global market enabling individuals to have a clear entry and exit price around the world when the time comes to add to their holdings or sell them.
With the price of silver trading at around $20 to $30 an ounce, buying a one-ounce coin offers a very low entry point for someone starting out on their investment journey. While the price of silver coins typically closely tracks the underlying spot price of the physical metal they are made of, some of the rarest vintages or particularly decorative coins can trade at a significant premium to the spot price.
Silver bars are the other main way an investor can buy the physical metal. Bars are larger in size and far less decorative than the coins, but the simplicity of the production allied to the larger size enables bars to benefit from economies of scale. This results in bars typically trading even closer to the spot price than coins. Coming soon, Kinesis will offer a new range of minted bullion coins and bars at their online bullion store, at some of the lowest prices in the precious metals sector.
Aside from physical ownership, the last few years have seen a surge in the range of exchange-traded funds, or ETFs, available. These funds offer exposure to the silver price with the holdings backed up by an equivalent amount of the physical metal. However, buyers of an ETF don’t gain ownership of silver, but rather, shares in the fund. As well as a small administrative charge levied for running these funds, potential investors should also factor in the element of counterparty risk that these funds have in contrast to physical silver itself.
Buying shares in the miners that produce silver is another way of gaining exposure to the silver price with the fortunes of the miners often closely mirroring the relative performance of the metals they are bringing out of the ground. With some of these miners also paying a dividend, holding mining stocks has the added potential benefit of providing a return for investors.
Is silver a good investment?
Silver is exposed to the same fluctuations that impact commodities and equities markets. As such, the price can go down as well as up, as seen this year when silver dropped from about $26 an ounce in March down to below $18 an ounce at the start of September.
While silver has suffered in recent months mainly as a result of the Federal Reserve implementing a series of large interest rate hikes which has lessened the appeal of the non-yield-bearing precious metal, the longer-term outlook is more bullish.
Silver is a key component of the energy transition, used in a variety of sectors including in photovoltaic cells in solar energy and as a part of the batteries used in electric vehicles. As a result, silver demand is set to reach a record high this year, according to the Silver Institute.
What Kinesis offers
Kinesis offers investors the KAG silver-backed token, which blends together the traditional benefits of physical silver ownership with the modern appeal of a fully digital asset. Namely, users can make everyday payments using their silver as money with the Kinesis Virtual Card, converting metal to fiat currency in real-time, at the moment of purchase. With the card, spenders can earn a proportionate yield for choosing to pay for their goods in silver – or gold.
Alternatively, holders of KAG earn a monthly return for keeping their precious metals in Kinesis’ secure vaulting network, known as the Holder’s yield. You can find out more about all the different usage-based yields Kinesis has to offer on its dedicated page, here.
Kinesis maintains a high level of trust and security, with each KAG backed by one ounce of fine silver, stored in fully insured and audited vaults, held in the holder’s name. While there are clearly many ways to buy silver, Kinesis digitalised silver offers users all the benefits of physical metal ownership, lowering barriers to entry into precious metals, while enabling them to earn a return on their platform activity every single month.
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Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis
